Should Value Investors Buy DHI Group (DHX) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is DHI Group (DHX). DHX is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DHX has a P/S ratio of 1.18. This compares to its industry's average P/S of 1.26.
Finally, we should also recognize that DHX has a P/CF ratio of 8.35. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 33.13. Over the past 52 weeks, DHX's P/CF has been as high as 16.56 and as low as -17.78, with a median of 11.86.
Tencent Music Entertainment Group (TME) may be another strong Internet - Content stock to add to your shortlist. TME is a # 2 (Buy) stock with a Value grade of A.
Tencent Music Entertainment Group is trading at a forward earnings multiple of 12.01 at the moment, with a PEG ratio of 0.44. This compares to its industry's average P/E of 23.45 and average PEG ratio of 1.29.
Over the past year, TME's P/E has been as high as 21.31, as low as 8.99, with a median of 13.57; its PEG ratio has been as high as 1.21, as low as 0.42, with a median of 1.88 during the same time period.
Furthermore, Tencent Music Entertainment Group holds a P/B ratio of 1.65 and its industry's price-to-book ratio is 7.20. TME's P/B has been as high as 2.13, as low as 0.90, with a median of 1.65 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that DHI Group and Tencent Music Entertainment Group are likely undervalued currently. And when considering the strength of its earnings outlook, DHX and TME sticks out as one of the market's strongest value stocks.
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DHI Group, Inc. (DHX) : Free Stock Analysis Report
Tencent Music Entertainment Group Sponsored ADR (TME) : Free Stock Analysis Report
